After years of rapid growth, economies in Brazil, Russia, India, China and South Africa, known collectively as the BRICS, have slowed considerably, International Monetary Fund data show. The economic environment has also gotten more difficult in central and eastern Europe, the Middle East and North Africa.

EY surveys found that many companies in these countries are under increased pressure to meet targets of their investors and owners. In countries where enforcement of anti-bribery and anti-corruption laws is less rigorous, survey respondents perceived a rise in unethical practices. The surveys involved 681 executives, senior managers and other employees at companies in eight Asia-Pacific countries and more than 3,000 board members, managers and their team members in 36 European, African and Middle Eastern countries.

While regulatory efforts to tackle fraud and corruption seem to be improving in China, where only 9% of respondents said using bribery to win contracts is common practice in their industry, 79% of respondents in Indonesia reported widespread bribery and corruption.

In South Korea, where investigations into alleged bribery are underway at state-owned enterprises, 86% of respondents said their companies have policies that are good in principle but do not work well in practice.

In India, 74% of respondents reported increased pressure to deliver good financial performance in the next 12 months, and 54% of respondents said their companies often make their financial performance look better than reality.

About half of all respondents in Malaysia (54%) said their companies are likely to take ethical short cuts to meet targets when economic times are tough, or double the Asia-Pacific average (27%).

Local application is key

“The majority of businesses surveyed have created or are in the process of creating policies and procedures to deal with fraud, bribery and corruption,” Chris Fordham, an EY managing partner for Asia-Pacific, observed in the introduction of one of the survey reports. “However, too often we see a disconnect in the local application of these policies and tools.”

Big data technology. Seventy-eight per cent of the Asia-Pacific respondents agreed that tapping the large volumes of data companies generate and collect routinely to examine all company transactions would result in better fraud detection and more effective prevention of corruption, but only 53% do it. In several Asia-Pacific countries, including Malaysia and Indonesia, IT investments are still seen more as a burden than a tool.

Whistleblower programmes. Eighty-one per cent of the Asia-Pacific respondents considered them useful, mainly because whistleblower programmes are easy to access and employees are willing to use them, but only 32% set them up. Concerns about potential retribution and lack of legal protection and confidentiality prevent implementation of whistleblower programmes. Thirty-four per cent of respondents in Europe, Africa and the Middle East said their companies had whistleblower programmes.

Codes of conduct. About half of the respondents in Europe, Africa and the Middle East said their companies had anti-bribery codes of conducts with clear penalties for breaking them and that senior management was strongly committed to the codes of conduct. Forty-eight per cent said certain unethical practices, such as offering gifts or cash to win business or falsifying financial statements, are justified to help a business survive an economic downturn. In Asia-Pacific, 40% of respondents said their companies have anti-bribery codes of conduct, but only 34% include clear penalties and senior management at only 35% of companies were seen as strongly committed to compliance.

How to better manage the risks

Companies have come a long way in reducing the risk of fraud, bribery and corruption in emerging markets. To do even better, EY suggested six ways to get a handle on fraud, bribery and corruption risks:

Own the problem. Management should seek input from employees on fraud, bribery and corruption policies, and boards should challenge management to prioritise risk and engage employees.

Open two-way communication. Senior management should set the tone with a robust framework of rules as well as ask questions and demand answers. Employees should step forward when they observe unethical behaviour.

Invest in tools and resources. Understand where the risks are and invest in technology that helps determine which data is relevant to detect and deal with risks.

Conduct regular assessments, internally and with the help of consultants, to change the game plan as new issues arise.

Communicate the risks of unethical behaviour and the benefits of managing fraud, corruption and bribery.

Localise solutions. Train local teams to be able to manage compliance requirements.

“Corruption and Business Risk on the Rise Worldwide”: Corruption is most likely in developing economies, but developed economies in North America and Europe experience their share, too, a global survey found. Also, respondents in 80 of the 107 participating countries felt corruption was on the rise.

“Companies Do Poorly Managing Corruption Risks in Emerging Markets”: Emerging markets have great potential for rapid growth, but corruption can run rampant. Existing processes exist to identify and mitigate corruption risks, but fewer than 40% of companies doing business in countries most prone to corruption use them well in mergers and acquisitions, with third-party agents or when establishing new operations.